Determinants of the number of bidders in the competitive procurement of electricity supply contracts in the Japanese public sector
Since the electricity retail market in Japan was partially opened to competition in 2000, many government entities have sought to solicit competing bids for the electricity supply to their office buildings or facilities, encouraging competition between the incumbents and new entrants. However, in many cases, only the incumbent utility bids for the contract and the competitive effects are limited. This paper presents a statistical analysis of bidders' participation in competitive procurement. We employ several count data regression models to explain the number of bidders other than the local electric utility. Our results suggest that the number of bidders would decrease in response to an increase in the load factor, perhaps because the new entrants are less competitive in serving customers with high load factors as they do not operate low-cost base-load power plants such as nuclear power plants; It would increase along with the voltage level and contract demand. The results also indicate that new entrants are more likely to participate in the bidding process in large city areas.
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- Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-333, March.
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